By Uche Usim
To keep Nigeria’s soaring debts of over N186 trillion from entering the danger zone where they dwarf growth, the federal government has rolled out a new loan blueprint for 2024 to 2027, with a rule that borrowing must not go beyond 60 per cent of the country’s total economic output by 2027 (debt-to-GDP).
The move, analysts say, is meant to keep the nation’s finances stable, assure investors that loans will be well managed and follow global standards on responsible borrowing.
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The Debt Management Office (DMO), in a statement at the weekend, said the new framework was endorsed by the Federal Executive Council (FEC) and developed with technical support from the World Bank and the International Monetary Fund (IMF). It noted that the MTDS is globally recognised as a benchmark for guiding governments in balancing borrowing needs with long-term debt sustainability.
According to the DMO, “The key objectives of the MTDS are to meet the Government’s financing needs and payment obligations in the short to medium term, taking into consideration the costs and risks trade-offs in the debt portfolio; to achieve optimum composition of the public debt portfolio that ensures debt sustainability; and to further deepen the domestic securities market through the introduction of new products.”
Under the new plan, Nigeria’s debt-to-GDP ratio, currently at 52.25 percent, is projected to gradually rise but will not exceed the 60 per cent ceiling set for 2027.
Interest payments will also be managed within a cap of 4.5 per cent of GDP, compared to 3.75 percent in 2024. Sovereign guarantees are to be kept under 5 percent of GDP, while the domestic-to-external debt mix will be rebalanced to 55:45 from the present 48:52 ratio, reducing the economy’s exposure to foreign exchange risks.
The DMO explained that the strategy also places emphasis on lowering refinancing risks, with not more than 15 per cent of debt maturing within a year, while ensuring that the average time to maturity for the debt portfolio is at least 10 years. Equally, foreign exchange debt will be capped at 45 per cent of the overall debt stock, down from the current 51.75 percent.
In preparing the MTDS, the government consulted extensively with stakeholders in both fiscal and monetary management, including the Central Bank of Nigeria (CBN) and the Federal Ministry of Finance. The involvement of the World Bank and IMF, the DMO stressed, was to ensure that Nigeria’s debt strategy is consistent with global standards and capable of reassuring investors and credit rating agencies that the country remains committed to responsible borrowing.
Officials also recalled that the previous MTDS covering 2020–2023 helped Nigeria to “look inward” in its borrowing approach, relying more on domestic sources to reduce vulnerabilities.
The new framework, they said, builds on those lessons while sharpening focus on sustainability, risk management, and investor confidence.
“The framework is designed to balance financing needs with sustainability while minimizing costs and risks,” the DMO assured, adding that with the approval of the strategy, Nigeria is better positioned to meet its financing requirements, strengthen fiscal discipline, and create the conditions for sustainable economic growth.
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